UK okay
Services soar
Increasing evidence of recovery in the UK economy is already casting doubt on the recently framed decision for the Bank of England to set out long-term guidance and targets for monetary policy. The recent revision of the UK's second-quarter GDP growth from 0.6 per cent to 0.7 per cent coupled with a strong showing from the service sector in a Confederation of British Industry survey into business confidence, suggests recovery is becoming entrenched. This has led many money market watchers to predict the Bank may have to dramatically rein in its forecast of historically low interest rates until at least 2016, with some pencilling in early 2015 for the first interest rate rises.
Debt risk
US ceiling fear
The US economy could find itself bumping up against its debt ceiling once again this autumn amid signs that the economic recovery there may not be as robust as many are hoping, with durable goods orders slumping by 7.3 per cent in July after three months of increases. The US could reach its theoretical ceiling of €16.69 trillion by mid-October, which is earlier than previously predicted, and the Treasury has written to House Speaker John Boehner in an attempt to encourage some action which would avoid the previous instances of political brinkmanship over the US economy. The previous time we reached this stage of proceedings, in early autumn 2013, the heightened uncertainty contributed to a downgrade in the US credit rating.
Breaking up is hard to do
RBS call
MP's this week called for the government to keep the possibility of breaking 82 per cent state-owned bank RBS into a 'good bank' and 'bad bank' in a bid to expedite its return to private hands. The Parliamentary Commission on Banking Standards called for "all the options for future structure to be examined as a matter of urgency". There is a fear among MP's that proposals to split the bank up have fallen out of favour with ministers and the Treasury as they fear it would be time consuming and distracting at a time when economic recovery is taking hold and could support a recovery across the wider RBS business as it stands.
Chairman Summers?
Obama picks his man
With Ben Bernanke believed to be ready to step down as chairman of the Federal Reserve Bank in the US around the turn of the year, it looks increasingly likely that former Treasury Secretary Larry Summers could be named as his replacement. President Obama is believed to prefer Mr Summers to Federal Reserve vice-chair Janet Yellen for the role, but the appointment could attract criticism particularly from those who lay some of the blame for the credit crunch and financial crisis at the feet of government officials, including Mr Summers, who rolled back financial regulation under the Clinton administration.
Aer lock
Ryanair ruling
Irish budget carrier Ryanair looks set for another bruising bust up with competition authorities, this time the UK Competition Commission, which has ruled that it should offload the majority of its stake in rival Irish airline Aer Lingus. The regulator has informed Ryanair that it should reduce its 28.8 per cent holding to 5 per cent and that a third party should be appointed to undertake the sale. Ryanair's combustible chief executive Michael O'Leary has railed against the ruling and said the company will appeal.
$6bn whammy
JPMorgan hit
US banking giant JPMorgan Chase faces being hammered with a $6bn payout demand from US regulators investigating allegations into the miss-selling of mortgage-backed securities to state-owned mortgage companies Fannie Mae and Freddie Mac in the run up to the financial crisis of 2007-08. The value of the assets sold to the government's mortgage companies collapsed during the credit crunch. JPMorgan has balked at the potential charge, and is counter-claiming that many of the assets it sold on were acquired with government support when it picked up the pieces following the collapse of the likes of Bear Stearns as the credit crunch took hold.
